BA Finance Corporation. v. Court of Appeals

G.R. No. 61464, 28 May 1988


Augusto Yulo secured a loan from the petitioner in the amount of P591,003.59 as evidenced by a promissory note he signed in his own behalf and as a representative of A&L Industries. Augusto presented an alleged special power of attorney executed by his wife, Lily Yulo, who managed the business and under whose name the said business was registered, purportedly authorized the husband to procure the loan and sign the promissory note. 2months prior the procurement of the loan, Augusto left Lily and their children which in turn abandoned their conjugal home. When the obligation became due and demandable, Augusto failed to pay the same.

The petitioner prayed for the issuance of a writ of attachment alleging that said spouses were guilty of fraud consisting of the execution of Deed of Assignment assigning the rights, titles and interests over a construction contract executed by and between the spouses and A. Soriano Corporation. The writ hereby prayed for was issued by the trial court and not contented with the order; petitioner filed a motion for the examination of attachment debtor alleging that the properties attached by the sheriff were not sufficient to secure the satisfaction of any judgment which was likewise granted by the court.


Whether or not the A&L Industries can be held liable for the obligations contracted by the husband.


Yes. A&L Industries is a single proprietorship, whose registered owner is Lily Yulo. The said proprietorship was established during the marriage and assets were also acquired during the same. Hence, it is presumed that the property forms part of the conjugal partnership of the spouses and be held liable for the obligations contracted by the husband. However, for the property to be liable, the obligation contracted by the husband must have redounded to the benefit of the conjugal partnership. The obligation was contracted by Augusto for his own benefit because at the time he incurred such obligation, he had already abandoned his family and left their conjugal home. He likewise made it appear that he was duly authorized by his wife in behalf of the company to procure such loan from the petitioner. Clearly, there must be the requisite showing that some advantage accrued to the welfare of the spouses.

Art. 122. The payment of personal debts contracted by the husband or the wife before or during the marriage shall not be charged to the conjugal properties partnership except insofar as they redounded to the benefit of the family.

Neither shall the fines and pecuniary indemnities imposed upon them be charged to the partnership.

However, the payment of personal debts contracted by either spouse before the marriage, that of fines and indemnities imposed upon them, as well as the support of illegitimate children of either spouse, may be enforced against the partnership assets after the responsibilities enumerated in the preceding Article have been covered, if the spouse who is bound should have no exclusive property or if it should be insufficient; but at the time of the liquidation of the partnership, such spouse shall be charged for what has been paid for the purpose above-mentioned.

Thus, the Court ruled that petitioner cannot enforce the obligation contracted by Augusto against his conjugal properties with Lily. Furthermore, the writ of attachmentcannot be issued against the said properties and that the petitioner is ordered to pay Lily actual damages amouting to P660,000.00.

* Case digest by Prince Dave C. Santiago, LLB-1, Andres Bonifacio Law School, SY 2017-2018

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